Fred Thompson on Budget & Economy

Former Republican Senator (TN)

Address recession with tax cuts & reducing interest rates

Q: Facing a recession, a lot of jobs being lost, what would you do as president?

A: Well, we’d all be better off if people didn’t think that these tax cuts were going to expire at the end of 2010.

Q: That’s a long-term fix; in 2008, a lot of people
are worried.

A: Well, it’s not something that politicians can snap their fingers and do, but we need to recognize that the Fed plays a very important role in this. And the Fed’s been gradually reducing rates.
Some people think not quite fast enough, but my strong hunch is that they’re going to continue to reduce interest rates. And I think that that will help.

Q: Is that enough?

A: It depends. There’s no question, now, that the subprime market problem has
reached over into the housing problem in general. Credit’s drying up, and consumer credit in general. You’re seeing it with regard to credit card interest rates and things of that nature. So it does look like that there’s a problem that needs addressing.

Stimulus package OK, but watch out for pork

Q: Would you address a possible recession with a stimulus package?

A: We’ve been through this stimulus dance before. And if we can come together on something that’s reasonable, I think it might be a necessary thing.
But the additional spending is usually fraught with pork and different interest groups, additions, & things of that nature. You’ve got to do something that’s immediate, which probably has to do with tax rebates. You can discuss as to who to give that to.
You want to help the lower-income first, I think, on something like this, but lower-income does not have a higher rate of participation.

Q: When you mean lower income, what level?

A: The lower bracket, 10% and below.
I’ve seen a proposal that makes a certain amount of sense, that, for a year, you could have a moratorium on that 10% bracket; take it to zero, increase the child credit. And that would get money into the hands of lower-income folks.

Consider stimulus package targeted to low-income people

Q: Do you support a short-run government stimulus package or should we just leave the economy alone?

A: Unemployment is up to five percent. That used to be considered full employment, but we’re going in the wrong direction with regard to that.
It’s not just the subprime market now. It’s poured over into the general housing market. Credit is scarce. It’s affected the consumer credit market in general. If you’re talking about automobile loans or you’re talking about credit card thieves
or anything like that, the money is getting tighter and tighter. We still have a bunch of two-handed economists in Washington. On the one hand, we may go into recession, and, on the other hand, we may not. Nobody knows.
We had a stimulus package back in ‘01. It’s targeted toward the lower income people. I think that has to be considered somewhere along the line if the economy calls for it, not today, but perhaps a little later on.

$9 trillion debt affects our national security

Q: Does our country’s financial situation creates a security risk?

A: Our country has a $9 trillion debt. A good chunk of that is owned by China. We’re bankrupting the next generation without any question. Every economist in Washington who’s looked
at it will tell you that. It affects our national security; for one reason is because we’re squeezing military spending. We’re spending at below historic norms under these circumstances for our defense, and we’re spending twice as much for entitlements.

Source: 2007 Des Moines Register Republican debate
Dec 12, 2007

Deficit spending ok for military, infrastructure, and R&D

Q: Are there programs so important you’d be willing to run a deficit to pay for them?

A: Yes, the military, the security of our people, first and foremost, always; our infrastructure, which is coming apart; and research and development, which is going
to help us solve some of the problems in the future as far as energy and a lot of other issues. But [we need to concentrate on reforming] our entitlement programs; by 2040 or so we’re going to eat up our entire budget.

Source: 2007 Des Moines Register Republican debate
Dec 12, 2007

We’re spending next generation’s money with no restraint

Q: What can you offer to recover the lost ground among Hispanics?

A: I think Republicans got away from those basic values we shared. It’s not just in the Hispanic community. It’s in the other communities that traditionally supported us.
We were too often affiliated with matters of corruption in the Congress. We are spending the next generation’s money, those yet to be born.
We are spending their money, with no restraint. We need to stand up for the values that we are supposed to believe in. We need to stand up for a strong national defense. We need to stand up for judges who will obey the law and follow the law, instead of
making it up as it goes along, and we need to stand strong for issues of pro-life, and support traditional values that are important to our families. This is very important to Hispanics as well as non-Hispanics.

Mandatory future spending lockdown is unsustainable

As far as the economic prosperity of the future is concerned, I think it’s a different story [than today]. I think if you look at the short term, it’s rosy. I think if you look at a 10-year projection, it’s rosy. But we are spending money we do not have.

We are on a mandatory spending lockdown that is pushing us in a direction that is unsustainable. We’re spending the money of future generations and those yet to be born. That has to do with our mandatory spending problem. We have to address that.

Source: 2007 Republican debate in Dearborn, Michigan
Oct 9, 2007

No reason to believe we’re headed for recession

Q: What will you do to ensure economic vibrancy in this country?

A: I think there is no reason to believe that we’re headed for a recession. We’re enjoying 22 quarters of successive economic growth that started in 2001, and then further in 2003 with
the tax cuts that we put in place. We’re enjoying low inflation. We’re enjoying low unemployment. The stock market seems to be doing pretty well. I see no reason to believe we’re headed for economic downturn.

Q: The Dow and the S&P 500 are at record
highs, and yet, 2/3rds of the people surveyed said we are either in a recession or headed for one. Why the angst?

A: Well, I think there are pockets in the economy. Certainly they’re having difficulty. I think you always find that in a vibrant, dynamic
economy. I think that not enough has been done to tell the greatest story never told, and that is that we are enjoying a period of growth right now, and we should acknowledge what got us there and continue those same policies on into the future.

Weak dollar damages us internationally

Q: What are the dangers of a weak dollar?

A: Dangers of a weak dollar is that it will damage us internationally. We’ve got to have a strong dollar because of the creditors that we have there.
It helps our exports to a certain extent now, and we’re enjoying that part of it. But any president of the United States has to stand behind a strong dollar. The whole world needs to know that we are good for our obligations.

Source: 2007 Republican debate in Dearborn, Michigan
Oct 9, 2007

FactCheck: Correct that US has enjoyed 22 quarters of growth

Thompson erred--but on the safe side--when he said, “We’re enjoying 22 quarters of successive economic growth.” Actually, the US economy has grown for 23 successive quarters, according to the most recent figures from the Bureau of Economic Analysis.
And when preliminary figures on gross domestic product for July, August and September are released later this month, the official total is expected to reach 24.

Trillions in debt will cause fiscal tsunami in a few years

In a few short years--not a generation from now--a fiscal tsunami that could imperil our security and economic prosperity will hit our nation and place an unfair burden of debt on our children and grandchildren. The tens of trillions of dollars in
debt that will be accumulated over the next few decades will do immense harm to our economy. This burden is now estimated at $170,000 per person and $440,000 per family. Time is running out to address this looming crisis.

Source: Campaign website, www.Fred08.com, “Issues”
Sep 20, 2007

Market-based budgetary reform: avoid pending fiscal crisis

We need market-based approaches to budgetary reform that guarantee benefits for those who need them and embrace personal responsibility and cost-effectiveness without raising taxes.
Given the scope and urgency of this problem, and the burden it will place on our children, reform is not only an economic necessity, it is a moral imperative that requires action now. I am committed to:

Opening the government’s fiscal books on this looming crisis for all to see and understand.

Working with individuals of all political persuasions to develop a comprehensive solution to the pending fiscal crisis.

Leading and making the hard choices necessary, to include cutting wasteful government spending, to safeguard our security, promote our prosperity, and protect our children and grandchildren from fiscal calamity.

Source: Campaign website, www.Fred08.com, “Issues”
Sep 20, 2007

Voted YES on prioritizing national debt reduction below tax cuts.

Vote to table [kill] an amendment that would increase the amount of the budget that would be used to reduce the national debt by $75 billion over 5 year. The debt reduction would be offset by reducing the tax cut in the budget framework from $150 billion